The government will manage a “triage” process for prioritising the connection of strategically important energy projects as part of its joint action plan with Ofgem for speeding up grid connections.
Working with the regulator, the Department for Energy Security and Net Zero (DESNZ) will establish a Connections Delivery Board to oversee the implementation of the six-point plan, which aims to cut the average wait for a connection from 5 years to 6 months.
Outlining the scale of the problem, DESNZ and Ofgem said 549GW of projects held connection agreements as of September – 406GW for the transmission network and 143GW for distribution networks. This queue includes 518GW of generation and storage – almost double the amount expected to be needed by 2035.
The Connections Actions Plan incorporates measures already being undertaken as part of the Electricity System Operator’s (ESO) five-point plan for accelerating transmission connections and the Energy Networks Association’s three-point plan for speeding up distribution connections.
DESNZ and Ofgem said these plans are expected to free up 100GW and 39GW of connection capacity respectively, although in the case of the former, a more detailed breakdown of the expected impact of the plans suggests the figure could be much higher.
Source: DESNZ and Ofgem
The Connections Action Plan has been published alongside a Transmission Acceleration Action Plan, which DESNZ produced in response to the June report by electricity networks commissioner Nick Winser.
The Connections Action Plan
Raise entry requirements: The ease of applying for, and perceived value of holding, a transmission connection, which can be sold on at a later date, has led to speculative bids, sometimes without the knowledge of relevant landowners. The ESO should immediately begin requesting a Landowner Letter of Authority (LoA) from new and existing applicants on a voluntary basis. It should also bring forward proposals to introduce a binding requirement within the Connection and Use of System Code (CUSC) to submit and maintain a LoA for new and amended applications. The ESO and network companies should additionally propose further measures to strengthen application requirements to the Connections Delivery Board (CDB).
Remove stalled projects: The issue of stalled projects is already being addressed by the introduction of a new queue management process through the CUSC modification CMP376, which was recently approved by Ofgem. Under the new process, projects are required to meet a series of new milestones. If their cumulative delays in meeting these milestones exceed set thresholds, their connections can be delayed or terminated by the ESO. Similar milestones have already been inserted into distribution connection agreements since 2017, but as part of the ENA’s three-point plan they are also being added to pre-2017 contracts.
As well as continuing with the implementation of these changes, the ESO and network companies should propose “more stringent” measures to the CDB to prevent stalled projects from blocking up the queue. These could include disincentivising, or explicitly limiting, modification applications; strengthening opportunities or requirements to return unused capacity; strengthening financial disincentives for holding capacity; and holding a one-off, facilitated trading window.
Better utilise existing capacity: The ESO and network companies should review their standards and processes to identify and assess options for optimising the use of the existing network. They also should review technical standards for connection assets and design, with possible areas for exploration including greater standardisation, the enhanced use of flexibility to avoid reinforcement, and the scope of contestable works.
The ESO and transmission owners should additionally assess whether further revisions should be made to their Construction Planning Assumptions concerning attrition rates for projects. They should also review the scope of enabling works – the minimum reinforcements required to connect to the transmission network. The recommendations resulting from all this work should be presented to the CDB.
Better allocate existing network capacity: The ESO, network companies and Ofgem should explore options for allocating the connection capacity released through other actions over the short and long-term to maximise the benefits. With the help of these parties, DESNZ and the Office for Investment will manage a “triage” process for prioritising the connections of “the most strategically important projects”. For new projects, the ESO and network companies should bring forward proposals to prioritise projects that are ready to connect ahead of the ESO’s implementation of long-term reforms to the connection application process.
Improve data and processes and sharpen obligations and incentives: The ESO and network companies should work together to create a “single digital view” of connections, the associated enabling and reinforcement works, and available capacity across transmission and distribution networks. The ESO and distribution network operators (DNOs) should also work together to improve existing processes at the interface between transmission and distribution and ensure DNOs can allocate grid supply point (GSP) capacity efficiently. DNOs should offer flexible connections and manage generation and demand within technical limits across all GSPs.
The ESO, network companies and Ofgem should additionally seek to standardise approaches to connections, for example, with regards to access rights and the allocation of costs to prevent a “postcode lottery.” Ofgem will review incentives, obligations and requirements on the ESO and network companies relating to connections.
Develop longer term connections process models aligned with strategic planning and market reform: DESNZ, Ofgem and the ESO will ensure the connections process is integrated with wider arrangements for strategic planning, including the Centralised Strategic Network Plan and the Regional Energy Strategic Plans that the Future System Operator will be responsible for delivering. DESNZ and Ofgem will likewise ensure connection reforms align with other reforms including the Transmission Acceleration Action Plan, the Review of Electricity Markets Arrangements, and the government’s Strategic Spatial Energy Plan.
Writing in the foreword to the Connections Action Plan, energy secretary Claire Coutinho said: “While there is a fundamental need for new network infrastructure, which the Transmission Acceleration Action Plan seeks to address, the process for grid connections is not fit for purpose.
“Our Connections Action Plan sets out ambitious plans for the UK government, Ofgem and industry to significantly accelerate connections.”
She continued: “We know that too many projects in the connection queue will not connect and many are hoarding capacity, preventing viable projects from connecting. We will move away from the ‘first come, first served’ approach, cutting the average delay that projects face to connect from 5 years to 6 months.”
Taken together, Coutinho said the Connections Actions Plan and the Transmission Acceleration Action Plan will bring forward £90 billion of investment over the next decade.
Ofgem chief executive Jonathan Brearley added: “The plan is a call for network companies, the system operator, and the sector as a whole to deliver a major step change in the pace of connections; strengthening incentives, obligations, and requirements to do so. It also asks connections customers to be realistic and flexible in their connection requirements, and to engage on our proposals as they develop.
“Finally, building on our recent actions, it sends a clear message to stalled ‘zombie’ projects that they need to use their place in the connections queue or lose it: a big step towards moving away from the first-come first-served system.”